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This 1 Chip Stock May Be Your Best Way To Play The 5G Revolution

This 1 Chip Stock May Be Your Best Way To Play The 5G Revolution

One chip stock looks ready to stage a breakout higher.

As the market has fallen this week, one group got hit particularly hard – semiconductors.

But as the group has fallen, one trader says one stock in the space looks ready to breakout.

Ascent Wealth Partners’ Todd Gordon says Skyworks Solutions (NASDAQ: SWKS) is set to rise amid the rollout of 5G technology.

“They’re trying to diversify away from just mobile phones and into the Internet of Things, specifically 5G,” Gordon said. “They’re trying to connect all of our devices to the internet and to each other called the Internet of Things. It’s creating a traffic jam in the current 4G network. 5G is designed to open up that traffic jam with faster speeds and more lanes of traffic.”

According to Gordon, Skyworks is well positioned to profit on the push into 5G given its investments in autonomous driving, smart homes, and wearables. And what’s more, Skyworks’ chart is pointing to a breakout higher.

Source: TradingView.

“You can see that Skyworks has broken out at about the $130 mark, there’s a high here on that earnings report” from late July, Gordon explained. “So, from $142 down towards about $135 would be deemed support. If you don’t have the position already, you could use any pullback here about [$135] to add this stock to your portfolio, looking for new highs.”

Skyworks shares are down nearly -12% over the last week. One way to play the stock’s move back towards highs, Gordon said he’s implementing a call spread and is buying the 140 strike call with a November 20 expiration, and selling the 160 strike call.

“In real dollar terms, that’s a $2,000 spread,” Gordon said. “You’ll have to pay about $863… so the max profit would be $2,000. Subtracted from the premium paid at $863 leaves the max potential profit at about $1,137.”

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